Mirvac Group (MGR)

UBS is waiting for more details on the pricing of any potential transaction with
Westpac Office Trust
before it incorporates incorporating the
Mirvac Group
’s $350 million capital raising into its earnings forecasts.

“In our view, Mirvac’s move on Westpac Office Trust (WOT), which lifts passive earnings at the expense of residential, should be viewed as a trade-off – that is, giving up some growth in return for reduced long-term earnings volatility," UBS wrote to investors.

The broker said Mirvac’s intention to make an offer for WOT (subject to due diligence and shareholder approval) moves the group “significantly closer to its well-flagged strategic goal of an 80/20 passive/active earnings mix across the cycle".

Mirvac raised $350 million underwritten at $1.40 to bolster its balance sheet, undertake a merger with WOT, and have some cash left over for other activity.

UBS estimates the acquisition could be up to 2 per cent earnings accretive.